Millennials Driving Housing Market Demand
New York, NY, December 15, 2021-"For years, conventional wisdom held that millennials, born from 1981 to 1996, would become the generation that largely spurned homeownership,” reports the Wall Street Journal. “Instead, since 2019, when they surpassed the baby boomers to become the largest living adult generation in the U.S., they have reached a housing milestone, accounting for more than half of all home-purchase loan applications last year.
“The generation’s growing appetite for homeownership is a major reason why many economists forecast home-buying demand is likely to remain strong for years to come.
“Rarely has the for-sale home market been more heated than in the past year. The median price of an existing home sold in October was nearly $354,000, close to a record and up about 13% from a year ago, according to the National Association of Realtors. Prices have climbed from a year earlier for a record 116 straight months, with double-digit percentage gains touching every corner of the U.S. this year.
“The frenzy has eased a bit in recent months. More buyers are pausing their searches or walking away, discouraged by the prices and a shortage of homes for sale, real-estate agents say. Some market watchers expect home sales to flatten or decline from current levels. They say the Covid-19 pandemic produced a sudden, unforeseen spike in home buying that won’t be repeated, pulling forward sales that would have been spread out over a number of years.
“But most housing analysts don’t expect a wave of sustained home price cuts for quite a while. They say the pandemic and the emergence of remote work accelerated millennial home-buying trends already under way. Young families living in apartments decided to buy houses in the suburbs or leave expensive cities for cheaper ones. Millennials who already owned homes traded up for more space. Forbearance on student-loan payments, federal stimulus checks and a booming stock market helped some first-time buyers afford a down payment.
“The generation accounted for 67% of first-time home purchase mortgage applications and 37% of repeat-purchase applications in the first eight months of 2021, according to CoreLogic. And as the largest cohort of millennials turned 30 this year-below the median first-time buyer age of 33-those percentages could rise higher still. That’s especially true because millennials are getting married and having children later in life than recent prior generations, events that can often prompt a home purchase.
“The financial stakes could scarcely be higher for millennials, who have faced a wide wealth gap with previous generations. Burdened by student debt and with career paths sidelined by the 2008 financial crisis and housing-market collapse, many millennials lacked the savings for a down payment in their 20s. Some distrusted homeownership as an investment. Credit standards tightened after the housing crash, making it more difficult for many young borrowers to qualify for loans.”